Rio Tinto delivers strong defence of its climate change stance

New Rio Tinto chairman Simon Thompson has launched a vigorous defence of the miner’s stance on climate change in the wake of sharp criticism at the company’s Australian annual general meeting, arguing the mining giant had made “huge progress” on the issue.

Mr Thompson said Rio had had a "clear public policy position on climate change for 20 years”, substantially cut its greenhouse gas emissions over the past decade and was now in the process of selling its remaining coal assets.

He made the comments as Rio shareholders were urged by an advocacy group to support a resolution urging the miner to review its membership of industry lobby groups like the Minerals Council of Australia.

The resolution garnered strong backing among shareholders, recording 18 per cent (or 42.1 million) of votes cast. This equates to about 10 per cent of Rio's investors in its ASX-listed shares. There was no corresponding vote at the company's meeting for investors holding its London Stock Exchange-listed shares.

Advertisement

Brynn O’Brien, executive director of the Australasian Centre for Corporate Responsibility, lead filer of the resolution, said the 18 per cent outcome was believed to be “the highest vote ever, on a similar issue - so on an environmental, social or governance issue - that has ever been received against a board in Australian corporate history.”

"It also demonstrates a real escalation in the activity of Australian investors," she said.

Whilst the resolution was voted on at the Melbourne meeting, but not formally, as it was contingent on another resolution receiving a special majority that it did not get.

"Industry associations perform a wide range of services to the industry."

Rio Tinto chairman Simon Thompson

Mr Thompson also addressed what he said was a misconception that industry associations, such as the MCA, were focussed solely on fossil fuels when in fact they provided a wide range of services.

"They help us particularly in Australia on critical issues like native land title, they help us to establish industry standards on critical areas like tailings management, they help us to develop our people...climate change is a hugely important issue, but it is only one of about 12 major areas where we engage with MCA.”

Mr Thompson said that “instead of simply walking out” of the MCA over a recent difference of opinion with the lobby group over energy and climate change policy that had since been addressed, it was more appropriate to engage with them to try and find common ground and move the debate.

That isn’t engagement, that is an ultimatum

Rio Tinto chairman Simon Thompson

“We just don’t think it is appropriate to go into a multi-stakeholder engagement, which is what an industry association is, with a set of rules and basically say to that association ‘Either you agree with Rio Tinto, or we’re leaving’. Because that isn’t engagement, that is an ultimatum,” he said.

Urging shareholders to vote for the resolution, Ms O’Brien criticised the Rio board for not supporting the resolution.

“We asked for the most basic transparency about your relationships with fossil fuels lobbyists, a full list of the organisations you belong to and the cost of those memberships. You have resisted," she said at the meeting.

“We asked for an evaluation of the advocacy done by these organisations, using shareholder funds, and their impacts on the company’s interests. You have resisted.

Loading

With Rio under pressure due to investigations by authorities in America and Australia over a disastrous and costly coal project in Mozambique, Mr Thompson acknowledged that the company’s reputation had “been called into question” in recent times.

But he added that Rio strongly denied the allegations made against it by the United States Securities and Exchange Commission and the Australian Securities and Investments Commission over the Mozambique coal project, and would defend itself in court.

Mr Thompson told shareholders that 2018 would be “more challenging than the last, as the industry faces rising cost inflation, as well as geopolitical uncertainties, particularly in relation to trade.” But he said Rio was well prepared.

After the meeting, when asked about aluminium markets, Rio’s leaders said the United States fluid policy position on trade sanctions had created a volatile environment in aluminium markets that underlined the unintended consequences of trade sanctions.